Council tax payment allocation in accordance with R. v Miskin Lower Justices [1953]

The request was partially successful.

Dear Dudley Council,

The Council makes the statement quoted below from the link:
https://www.whatdotheyknow.com/request/e...

"I can advise that cash is allocated as per the cash posting rules present in the council's financial system. For example:

- If the payment received is for the same value as an instalment in the current billing year - the receipt is allocated to the instalment in the current financial year.

- If the payment received did not match a current instalment, or an instalment for a pre agreed arrangement for any arrears, then the payment would be allocated to the oldest debt outstanding regardless of any enforcement stage reached."

The council's statement above does not agree with the judgment in the case of R. v Miskin Lower Justices (see below link to the judgment):

http://s000.tinyupload.com/index.php?fil...

The judgment clarifies the position in cases where a creditor has to make a decision as to which account payment should be allocated when a debtor has one account more burdensome for him than another and his payment is unspecified

Clearly the council's statement, if it were to agree with the judgment, would be.....

[[ Where the debtor does not make any reference as to where the payment should be allocated then the creditor must allocate the payment to the account which it is most beneficial to the debtor to reduce. ]]

Q. Where did the council obtain the information regarding the appropriation of payments case law which conflicts with the judgment in R. v Miskin Lower Justices [1953]?

Yours faithfully,

S Staffordson

Dudley Triggers, Dudley Council

Dear S Staffordson,

Information Access Request - Information Request DMBCIR:21522
Description : Payments Case Law Judgement Source

I acknowledge your request for information received on 2019-09-20
10:05:00.

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requested within the statutory timescale of 20 working days (Freedom of
Information Act 2000/Environmental Information Regulations) or 1 month
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[Dudley Metropolitan Borough Council request email]

Malcolm Guy, Dudley Council

Our ref: 21522     Service:  Corporate Information Governance
Team            Direct Line: 01384 814696   Date: 11/10/2019
 
 
S Staffordson
Whatdotheyknow.com
 
11/10/2019
 
Dear S Staffordson,
 
Freedom Of Information Act 2000 - Information Request 21522
 
Your request.
 
The Council makes the statement quoted below from the link:
[1]https://www.whatdotheyknow.com/request/e...
 
"I can advise that cash is allocated as per the cash posting rules present
in the council's financial system. For example:
 
- If the payment received is for the same value as an instalment in the
current billing year - the receipt is allocated to the instalment in the
current financial year.
 
- If the payment received did not match a current instalment, or an
instalment for a pre agreed arrangement for any arrears, then the payment
would be allocated to the oldest debt outstanding regardless of any
enforcement stage reached."
 
The council's statement above does not agree with the judgment in the case
of R. v Miskin Lower Justices (see below link to the judgment):
 
[2]http://s000.tinyupload.com/index.php?fil...
 
The judgment clarifies the position in cases where a creditor has to make
a decision as to which account payment should be allocated when a debtor
has one account more burdensome for him than another and his payment is
unspecified
 
Clearly the council's statement, if it were to agree with the judgment,
would be.....
 
[[ Where the debtor does not make any reference as to where the payment
should be allocated then the creditor must allocate the payment to the
account which it is most beneficial to the debtor to reduce. ]]
 
Q. Where did the council obtain the information regarding the
appropriation of payments case law which conflicts with the judgment in R.
v Miskin Lower Justices [1953]?
 
 
I have been asked to seek clarification on your above request.
 
Unfortunately I have been asked if you can clarify/rephrase your enquiry
above to specify exactly what information you require for your request as
we do not fully understand what is required.
 
If the Council does not receive the requested clarification by the
25/10/2019, I shall take it that you do not wish to pursue this request
and will consider the request closed.
 
Your request will be processed upon receipt of this information and you
will receive the information requested within the statutory timescale of
20 working days as defined by the Freedom of Information Act 2000.
 
For your information, the Act defines a number of exemptions which may
prevent release of the information you have requested.  There will be an
assessment and if any of the exemption categories apply then it cannot be
released.  Similarly if the information you request contains reference to
a third party then they may be consulted prior to a decision being taken
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If appropriate, the information may be provided in paper copy, normal font
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MBC, The Council House, Dudley, West Midlands, DY1 1HF, telephone 0300 555
2345, e-mail [3][Dudley Metropolitan Borough Council request email]. 
 
Please remember to quote the reference number above in any future
communications.
 
If you are not content with the outcome of your complaint, you may apply
directly to the Information Commissioner for a decision.  Generally, the
ICO cannot make a decision unless you have exhausted the complaints
procedure provided by Dudley MBC.
 
The Information Commissioner may be contacted at:
 
Information Commissioner's Office
Wycliffe House
Water Lane
Wilmslow 
Cheshire 
SK9 5AF
Telephone:   01625 545 700
[4]www.ico.org.uk
 
Yours sincerely,
 
M J Guy
 
(Information Governance Officer – Dudley MBC)
 
 
 
 
 
 
 
This Email and any attachments contains confidential information and is
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has been misdirected, please notify the author as soon as possible. If
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subject to appropriate safeguards to protect against unauthorised or
unlawful processing and against accidental loss or destruction or damage.
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further shared where there is a legitimate need. If you are not the
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on any of the information contained, and all copies must be deleted
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therefore carry out your own anti-virus checks before opening any
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References

Visible links
1. https://www.whatdotheyknow.com/request/e...
2. http://s000.tinyupload.com/index.php?fil...
3. mailto:[Dudley Metropolitan Borough Council request email]
4. http://www.ico.org.uk/

Dear Malcolm Guy,

Where did the council obtain the advice/authority that enabled it to determine that it would be appropriate for the council to allocate payment which did not match a current instalment to the oldest debt outstanding. For example, a lawyer, the council's monitoring officer, the Institute of Revenues Rating and Valuation (IRRV) 10 October 2002 Insight magazine http://s000.tinyupload.com/index.php?fil...

Or here?
https://www.whatdotheyknow.com/request/4...

Yours sincerely,

S Staffordson

Information Governance, Dudley Council

Our ref: 21522     Service:  Corporate Information Governance
Team            Direct Line: 01384 815607   Date: 11/11/2019
 
 
S Staffordson
Whatdotheyknow.com
 
11/11/2019
 
Dear S Staffordson,
 
Freedom Of Information Act 2000 - Information Request 21522
 
Your request for information received has now been considered and our
response is enclosed.
 
Your request and our response.
 
The Council makes the statement quoted below from the link:
[1]https://www.whatdotheyknow.com/request/e...
 
"I can advise that cash is allocated as per the cash posting rules present
in the council's financial system. For example:
 
- If the payment received is for the same value as an instalment in the
current billing year - the receipt is allocated to the instalment in the
current financial year.
 
- If the payment received did not match a current instalment, or an
instalment for a pre agreed arrangement for any arrears, then the payment
would be allocated to the oldest debt outstanding regardless of any
enforcement stage reached."
 
The council's statement above does not agree with the judgment in the case
of R. v Miskin Lower Justices (see below link to the judgment):
 
[2]http://s000.tinyupload.com/index.php?fil...
 
The judgment clarifies the position in cases where a creditor has to make
a decision as to which account payment should be allocated when a debtor
has one account more burdensome for him than another and his payment is
unspecified
 
Clearly the council's statement, if it were to agree with the judgment,
would be.....
 
[[ Where the debtor does not make any reference as to where the payment
should be allocated then the creditor must allocate the payment to the
account which it is most beneficial to the debtor to reduce. ]]
 
Q. Where did the council obtain the information regarding the
appropriation of payments case law which conflicts with the judgment in R.
v Miskin Lower Justices [1953]?
 
 
The Freedom of Information Act only covers information held in recorded
form, therefore local authorities are not required to create new
information or find the answer from staff who may happen to know it.
 
Further to our previous answer regarding payment allocation, we are more
than happy to discuss the allocation of any payments on account with the
payee should they believe it has been done incorrectly. 
 
 
If you have any queries or concerns then please contact me.
 
If you are unhappy with the service you have received in relation to your
request and wish to make a comment or complaint, or request a review of
the decision, you should write to the Freedom of Information Officer at
Dudley MBC, The Council House, Dudley, West Midlands, DY1 1HF, telephone
0300 555 2345, e-mail [3][Dudley Metropolitan Borough Council request email]. 
 
Please remember to quote the reference number above in any future
communications.
 
If you are not content with the outcome of your complaint, you may apply
directly to the Information Commissioner for a decision. Generally, the
ICO cannot make a decision unless you have exhausted the complaints
procedure provided by Dudley MBC.
 
The Information Commissioner may be contacted at:
 
Information Commissioner's Office
 
Wycliffe House
Water Lane
Wilmslow 
Cheshire 
SK9 5AF
Telephone:   01625 545 700
[4]www.ico.org.uk
 
Most of the information that we provide in response to Freedom of
Information Act 2000 requests will be subject to copyright protection.  In
most cases the copyright will be owned by Dudley MBC. The copyright in
other information may be owned by another person or organisation, as
indicated in the information itself. You are free to use any information
supplied for your own use, including for non-commercial research purposes.
The information may also be used for the purposes of news reporting.
However, any other type of re-use, for example, by publishing the
information or issuing copies to the public will require the permission of
the copyright owner.
 
For information where the copyright is owned by the Council details of
the conditions on re-use can be found on our website at
[5]www.dudley.gov.uk.
 
For information where the copyright is owned by another person or
organisation, you must apply to the copyright owner to obtain their
permission.
 
Yours sincerely,
 
M J Guy
 
(Information Governance Officer – Dudley MBC)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This Email and any attachments contains confidential information and is
intended solely for the individual to whom it is addressed. If this Email
has been misdirected, please notify the author as soon as possible. If
this email has a protective marking of OFFICIAL – SENSITIVE, PROTECT or
RESTRICTED in its title or contents, the information within must be
subject to appropriate safeguards to protect against unauthorised or
unlawful processing and against accidental loss or destruction or damage.
OFFICIAL – SENSITIVE, PROTECT and RESTRICTED information should only be
further shared where there is a legitimate need. If you are not the
intended recipient you must not disclose, distribute, copy, print or rely
on any of the information contained, and all copies must be deleted
immediately. Whilst we take reasonable steps to try to identify any
software viruses, any attachments to this e-mail may nevertheless contain
viruses which our anti- virus software has failed to identify. You should
therefore carry out your own anti-virus checks before opening any
documents. Dudley Metropolitan Borough Council will not accept any
liability for damage caused by computer viruses emanating from any
attachment or other document supplied with this e-mail.

Please consider the environment - do you need to print this e-mail?

References

Visible links
1. https://www.whatdotheyknow.com/request/e...
2. http://s000.tinyupload.com/index.php?fil...
3. mailto:[Dudley Metropolitan Borough Council request email]
4. http://www.ico.org.uk/
5. http://www.dudley.gov.uk/

Dear Dudley Council,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Dudley Council's handling of my FOI request 'Council tax payment allocation in accordance with R. v Miskin Lower Justices [1953]'.

When a decision is made with potentially legal implications the council is required to consult the Monitoring Officer and such procedures should be formally recorded. A decision that requires setting the parameters of a council tax payment processing system to automatically allocate non-specific payments to the oldest account rather than to the in-year account is one such decision.

If the proper legal process was followed when the decision was made then there will be a record of it comprising a background outlining the relevant legal requirements and risk assessment highlighting the degree to which the council would be exposed to legal challenge if not complied with. The following is an example of the kind of assessment that should have been documented.

https://democracy.npt.gov.uk/documents/s...

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/c...

Yours faithfully,

S Staffordson

Information Governance, Dudley Council

Dear Mr Staffordson,

Re: Freedom Of Information Act 2000 - Information Request 21522

Thank you for your email dated the 2nd January 2020.

I confirm that your request for information and the council's initial response to that request has now been reviewed. In your original request you specifically asked for:

Q. Where did the council obtain the information regarding the appropriation of payments case law which conflicts with the judgment in R. v Miskin Lower Justices [1953]?

I can confirm that following further investigation, the council does not hold any recorded information that specifies where the council obtained the information to which you refer.

The only information the council holds is that which is recorded as a process within the council's financial system. That being:

- If the payment received is for the same value as an instalment in the current billing year - the receipt is allocated to the instalment in the current financial year.
- If the payment received did not match a current instalment, or an instalment for a pre agreed arrangement for any arrears, then the payment would be allocated to the oldest debt outstanding regardless of any enforcement stage reached.

If customers make payments and specify to us where the payment needs to be allocated we will follow their instructions. If contact is made by the customer, within a reasonable amount of time after receiving the payment, regarding which debt the payment is in respect of, we will allocate the payment to the debt specified and note their account as appropriate.

The council has two duties under the Freedom of Information Act:

1). To advise you as to whether the council holds any information falling within the scope of your request; and

2). To provide that information if it is held.

In this particular case, it is confirmed that the council does not hold information falling with the scope of your request. It has been observed that the approach identified is common practice across many Local Authorities and you may wish to raise your query with the Institute of Revenues Rating and Valuation (IRRV) that advises Local Authorities on Council Tax Law and Practice. Further details on the IRRV can be obtained at this link:

http://www.irrv.net/homenew/item.php?iid...

If you are not content with the outcome of your review, you may apply directly to the Information Commissioner for a decision. Generally, the ICO cannot make a decision unless you have exhausted the complaints procedure provided by Dudley MBC.

The Information Commissioner may be contacted at:

Information Commissioner's Office

Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF
Telephone: 0303 123 1113

www.ico.org.uk

Yours sincerely

This Email and any attachments contains confidential information and is intended solely for the individual to whom it is addressed. If this Email has been misdirected, please notify the author as soon as possible. If this email has a protective marking of OFFICIAL – SENSITIVE, PROTECT or RESTRICTED in its title or contents, the information within must be subject to appropriate safeguards to protect against unauthorised or unlawful processing and against accidental loss or destruction or damage. OFFICIAL – SENSITIVE, PROTECT and RESTRICTED information should only be further shared where there is a legitimate need. If you are not the intended recipient you must not disclose, distribute, copy, print or rely on any of the information contained, and all copies must be deleted immediately. Whilst we take reasonable steps to try to identify any software viruses, any attachments to this e-mail may nevertheless contain viruses which our anti- virus software has failed to identify. You should therefore carry out your own anti-virus checks before opening any documents. Dudley Metropolitan Borough Council will not accept any liability for damage caused by computer viruses emanating from any attachment or other document supplied with this e-mail.

Please consider the environment - do you need to print this e-mail?

Dear Information Governance,

I have decided against pursuing this. However, further to my email of 2 January 2020 my thoughts are that this issue should be put before the council's Monitoring Officer as it is his duty to ensure all decision making is lawful and the legal process described in that email should have been followed in arriving at the decision.

I understand that the software supplied to local authorities for the purpose of payment allocation has a parameter which can typically be set so that when a payment fails to match one of the rules it will, option 1, be applied to the in-year account, or option 2, be applied to the oldest years account. Therefore, it is within the council's control to maximise the frequency with which non-specific payments would be correctly applied i.e. to maintain the in-year account as a priority.

Regarding the Miskin case law, despite being decided in 1953, it is obviously relevant to Council Tax or there would unlikely be guidance tailored specifically for the benefit of Local Authorities. For example, Ipswich Council demonstrates its awareness of the case and other case law relevant to Council Tax liability in the following page exhibited presumably from a book entitled "Local Authority Revenues" https://www.whatdotheyknow.com/request/4...

The relevant passage summarises a billing authority's obligations regarding the allocation of payments where a customer has several accounts payable to the council in the context of R v Miskin Lower Justices and associated case law. The Institute of the Revenues Rating and Valuation (IRRV) has published similar in its 10 October 2002 Insight magazine https://tinyurl.com/y3hoyx9v

In respect of the council's statement; "if the payment received did not match...", there was no precedent set in the Miskin case based on payments matching the instalment amount of a particular year.

https://tinyurl.com/vk2pwhn (R v Miskin)

It is clear from the first paragraph of the judgment that the debtor (husband) did not once in any of the payments he made, make a payment matching an amount that he was required to under the terms of the maintenance/committal orders. The judge held that an appropriation was inferred from the circumstances to be the debt which it was most beneficial for the debtor to reduce (see quoted from the judgment).

"...the question whether the payments made by the husband should be appropriated to the original debt depended on the particular facts of the case. The husband would be likely to wish the payments to be utilized in discharge of the original debt..." (so that he would secure his release from the committal order).

As for the Council defending the practice of applying non-specified payment to the oldest year where a debt remains outstanding, the overwhelming evidence is that this does not accord with established case law.

Possibly the council has been influenced by the ruling in Devaynes v Noble 1816 merivale 529 (Clayton's Case). Clayton's Case is confined to cases where there is an unbroken account between the parties, or “one blended fund,” as in the case of a current account at a bank or between traders; it does not apply where there is no such account or fund, but merely distinct and separate debts. Snells Principles Of Equity's gives a definition in the document here: https://tinyurl.com/y3uzpd5n

A number of billing authorities wrongly rely on the Clayton Case ruling to justify allocating non-specific payment to the arrears because the effect of the rule is that in the absence of any express appropriation, each payment is impliedly appropriated to the earliest debt that is not statute-barred (payments are presumed to be appropriated to debts in the order in which the debts are incurred). They are of course misinformed because the rule does not apply to Council Tax as it consists of distinct insulated debts, between which a plain line of separation can be drawn (a bill is issued each year relating specifically to that year's liability).

Conveniently in the Clayton Case judgment the rules by which the application of indefinite payments are governed have been discussed. Clearly before any consideration is given as to the order in which the debts have arisen it must be asked, to which of the debts would the allocation be most beneficial to the debtor? (where the purpose for which a payment is made is unspecified it must be carried to that account which it is most beneficial to the debtor to reduce). Only if it was of no more benefit to the debtor which of the accounts payment was applied to could it be said that allocating non-matching payments to any arrears would be in accordance with established case law.

https://en.wikipedia.org/wiki/Devaynes_v... (Clayton's Case)

It is noteworthy that the Sri Lankan case, Ephraims v. Jansz (1895) 3 N.L.R. 142, similarly discussed the rules relating to the appropriation of payments in the context of the onerous nature of debt due on several accounts. The condition in the below quoted from the judgment could not be more relevant to the circumstances that are in issue with Council Tax liability:

https://www.lawnet.gov.lk/wp-content/upl... (Ephraims v. Jansz)

"If no such appropriation is made at the time of payment, the creditor must apply it to some claims which could be enforced at the time of payment and which at the moment is not in controversy."

Council Tax may be enforced (subject to payments being met) so a customer's in-year liability is not in controversy, providing his instalments are paid when due. An unspecified payment then, applying this principle, would have clearly been misappropriated if the council applied it to arrears so causing his in-year liability instalment to have not been met.

But regardless of whether the principle in the Sri Lankan case can be relied on, a customer having one liability more onerous for him than another must have his payment if it were unspecified carried to that account which it is most beneficial for him to reduce in line with other case authority mentioned.

The council's processing system applies payments in respect of the customer's implied intention but on a severely restricted basis (solely on the sum paid corresponding with an instalment amount). A payment matching a specific liability covers only one of several ways that the taxpayer's election may be implied. For example, case authority has consistently found that a debtor's intention may be indicated from the circumstances of the transaction (see Khandanpour v Chambers [2019] EWCA Civ 570 "Appropriation" from para 25). https://www.bailii.org/ew/cases/EWCA/Civ...

A debtor's payment pattern could indicate a debtor's intention to appropriate payment to a particular debt, so if a pattern had emerged of a customer's payment being made and accepted as credited to a particular debt then it would be inferred from the nature of the transaction, even if not expressed at the time by the customer, that he intended to ascribe it to that account. A customer having one liability more onerous for him than another must have his payment if it were unspecified carried to that account which it is most beneficial for him to reduce.

A customer who would be caused the additional burden from recovery action being taken in respect of his in-year liability as a consequence of payment being applied to his arrears, would clearly have intended his payment to be appropriated to his in-year liability to avoid unnecessary additional costs etc. Evidence of an intent to appropriate, although falling short of being express, would be provided in those particular circumstances to be an election to pay specifically on the current year's liability (the inference from the circumstances of a transaction is just as valid an election to pay specifically on one of several accounts as if his election were expressed).

A customer who made payment in an amount sufficient to prevent his in-year liability falling in arrears would have good cause to bring legal proceedings against the council if it were to allocate his payment to a previous year's charge (thus unnecessarily burdening him further) merely because it did not match the instalment amount. In any event, I understand that a billing authority's duty, as a priority, is to maintain a customer's in-year account with payments received in respect of his liability, so logically the frequency with which payment would be correctly applied would be maximised (under automated conditions) if the parameters in the Council Tax processing system were set so that any unspecified payments were applied to the current year's charge.

P.S. Your Monitoring Officer might wish to look at this from the following perspective:

Let's say a Customer has an outstanding balance of £95.01 secured by a Magistrates' court Liability Order from a previous year's charge. This gives councils the power to use various enforcement methods to collect the debt and adds costs to the arrears. The standard costs rubber stamped by the court are in the sum of £92.50 so the total amount owing the council for that year's charge has increased to £187.51. The customer now has his in-year Council Tax obligation to meet as well as the amount secured by a court order from the previous year's charge.

The customer's in-year payments are set at £121.95 for the first instalment and £120.00 for the remaining nine (£1,201.95 in total). The customer makes his first payment of £122.00 but because the council's system applies payments that do not exactly match to the oldest debt, his in-year Council Tax obligations have been detected by the computer system to have not been met even though the payment was made in sufficient an amount to prevent his in-year liability falling in arrears. Although Council Tax liability consists of distinct insulated debts, between which a plain line of separation can be drawn, the benefit to the council is the same (£122.00) whether payment is applied to the in-year account or arrears so there is no legitimate advantage for the council nor justification in engineering a further burden for the customer in respect of his in-year liability. The previous year's debt has already been secured with a court order which has no time limit restricting its use.

It is therefore reasonable to suspect that the council allocates non-matching payments to the arrears thus imposing an additional £92.50 standard costs in respect of the in-year engineered non-payment for a non-legitimate reason. But there is no theoretical advantage to the council in respect of the costs it claims because the law only entitles it to claim the actual expenditure it incurs. It would therefore be self defeating if the council were to go about obtaining court orders merely to benefit from the application if its costs claim was genuine and not inflated. Another possible motive would be to punish the customer, but this is troublesome for the council because it is making use of the Magistrates' court unnecessarily and in so doing burdening the customer with a further £92.50 debt. This by definition is penalising the customer with imposed costs which is impermissible according to established case authority. It was held on judicial review of a licensing case R v Highgate Justices ex parte Petrou [1954] 1 ALL ER 406 that costs should not exceed the proper costs incurred and should not be a penalty.

In the more recent case it was held that the Magistrates were bound to decide the matter of costs in accordance with the Council Tax (Administration and Enforcement) Regulations 1992 (the court needs to be satisfied that it was reasonable for the council to incur them) i.e. they would not reasonably have been incurred if it was not reasonable for the council to take steps to enforce payment (see paras 34 and 51 of R (Nicolson) v Tottenham Magistrates [2015] EWHC 1252) http://www.bailii.org/ew/cases/EWHC/Admi...

In the aforementioned scenario the council would have impermissibly obtained a court order to enforce the misappropriated £122.00 element of the liability TWICE. This is because the payment which was intended to be applied to the in-year liability was misapplied to the arrears.

Each year's liability is a distinct debt so if the council has a secured debt in respect of one year's charge it cannot use the same court order to enforce payment if a customer defaults in a subsequent year (another order must be obtained from the court). However, the court order securing £187.51 debt from a previous year was effectively used to collect the sum of £122.00 which was actually paid in respect of the in-year liability (the amount secured by the previous court order reduced to £65.51). The customer's in-year liability did not only remain unchanged as a result of the misapplied £122.00 payment it actually increased by £92.50 because of the court costs attributable to the council's further application to the Magistrates' court (the in-year liability increased to £1,294.45 which was secured by a fresh court order).

The upshot of all this is that the customer has outstanding liability relating to two separate debts, each independently subject to enforcement by the various oppressive methods enabled by the court order. The customer's overall indebtedness arising from the misappropriated payment has immediately increased by £92.50 because of unnecessary court costs. In engineering the default, the council has clearly been shown to have unlawfully used an order securing a previous year's debt to enforce payment from the in-year liability which was perversely the cause of the Council Tax processing system triggering recovery in respect of the in-year liability (the same £122.00 amount has been subject to enforcement by two separate court orders).

Yours sincerely,

S Staffordson